Consumer price index fix may affect U.S. expats here

Your staff article and David G Housman, who is cited in Friday’s article about impacts to U.S. expats here of the fiscal cliff disaster, are incorrect in stating that most expats here are unlikely to be very impacted by whatever resolution is found to the “fiscal cliff.”

While there has been no final agreement, President Obama has already agreed to implement the “chained Consumer Price Index” to government programs, and, because this will impact the poor and middle class most, this federal spending-saving measure is highly unlikely to be opposed by the Republicans.  Chained CPI would affect cost-of-living adjustments in response to inflation for Social Security, Medicare, and federal government pensions, among other programs.  While the impact of chained CPI would be modest at first, they would increase over time.  Such effects over time are described in a CNN analysis:

“For Social Security beneficiaries, the effect would barely be felt in a one-year period. In most years, chained CPI differs from the other inflation measure very little — only by about 0.3 percentage points, according to the Social Security Administration’s chief actuary.

“This year, for example, that would shave about $4 a month off the cost of living increase for the average Social Security recipient. Currently slated for a $21-dollar-a-month increase, the average Social Security recipient would instead receive a boost of only $17 a month….

“But over time, the effect is compounded, and that has advocates for retirees up in arms.

“Consider a person who retired at age 65 in 2000. If chained CPI had been used to calculate his annual cost of living adjustments, his monthly Social Security checks would total around $1,880 now, $106 less than under current law.

“The longer a person lives, the larger the effect becomes. According to AARP, retirees lucky enough to live to 92 would lose a month’s worth of benefits.”

Effects would be similar for federal pensioners such as myself.

Loren B. Ford

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